The Self Storage Association of the United Kingdom (SSA-UK) has released its eighth annual survey report providing industry data on average rents, occupancy, facility types and other information. Produced by Deloitte Real Estate, the report surveyed 79 self-storage operators representing 403 U.K. facilities.
Despite the introduction of a 20 percent value-added tax (VAT) imposed by the government in October 2012, the report estimates the U.K. self-storage market reached £385 million in revenue in 2013, with 79 percent of respondents expecting to achieve improved profit this year.
Average occupancy was 71 percent, a 3 percent improvement over 2012 figures. Association officials attributed the gain to fewer new facilities opening in 2013 and operators concentrating on filling their existing buildings. Increased consumer demand has spurred some operators to plan portfolio expansions, with much of the new growth expected in areas outside of London, SSA-UK officials said.
“Figures are encouraging, as operators are seeing increased occupancy; although to some degree, this has been offset by slightly lower income levels,” said Rennie Schafer, CEO of SSA-UK. “Considering that 20 percent VAT was applied to the rent of self-storage units 18 months ago, the industry has shown remarkable resilience. Life-changing moments like moving home and starting families do not stop during a recession, and this contributes to the 60 percent of space that is rented by the private customer.”
Although a majority of rentable space is used by residential customers, overall use by consumers remains low, with just 3 percent of the public currently using self-storage, according to data from more than 2,000 adults surveyed by YouGov PLC, which is also contained in the report. Of those surveyed, 38 percent said they know “a reasonable amount” about self-storage, and 8 percent said they are considering using services.
The report estimates there are 975 self-storage facilities among 420 operators in the U.K., although 339 locations are held by the region’s 10 largest operators. The properties comprise 34.4 million square feet of rentable space, accounting for about 41 percent of the available self-storage in Europe, SSA-UK officials said. London continues to dominate the market with 8.5 million square feet of space, followed by Manchester, England, with 536,000 square feet.
Business customers account for 40 percent of rented storage space, with many choosing flexible terms offered by operators for office space.
Analysts believe the U.K. self-storage market is poised for growth, but a lack of available land will challenge operators to meet future demand. “With occupancy rising and the sector continuing to show resilience despite the introduction of VAT, we are seeing an optimistic outlook from both operators and investors,” said Ollie Saunders, head of self-storage at Deloitte Real Estate. “There are new stores planned, but the shortage of available land and the potential to redevelop self-storage facilities for alternative uses will mean that supply is likely to not be able to meet the future demand. We have also seen a resurgence in corporate activity with a number of important transactions, as operators start to acquire existing stores to expand—both in the U.K. and Europe.”
A PDF copy of the 32-page “Self Storage UK Annual Survey” report is available for free download from the SSA-UK website.
Deloitte Real Estate is a full-service real estate firm offering traditional property services and financial and business consulting.
The SSA-UK is the trade association for the self-storage industry in the United Kingdom. Its mission is to support member operators and vendors, promote best business practices, and raise public awareness.